I entered into a contract last fall for a home remodel/addition. We started work 10/21/20. As the job has progressed (I'm still on it), the scope of work was significantly reduced even though the bottom line remained the same. In effect the job was becoming a time and materials or cost plus?... .The house is a cheap spec build so lots of tweaking was needed to iron out uneven floors, unsquare doorways, etc. The variety and number of problems exceeded my ability to keep up with change orders as we were under a deadline to complete. By late November, early December it was clear that we were going to be going over our estimates. I worked up and presented an accounting via email and phone discussion in mid December and discussed this extensively. The client insisted the contract total should prevail, though he agreed to pay a little more. Now I am at a point where the pure cost of the job (to me: wages paid and subcontractor totals) exceeds what he is saying he owes by a considerable amount. I have shown good faith and have virtually completed the project - 99.5%. I have given him another accounting. He doesn't dispute my accounting but says he doesn't have any money. Recently I've seen him have a new driveway and gutters installed. What can I do?
Based on the facts above, your best bet is likely going to be to file a mechanic's lien on the property for any unpaid amount within 90 days of completing your work (or 60 days from any notice of completion should the owner file one.) Remember that you cannot record a lien while still performing work as further work will void the lien. But if the project is complete, you should record your lien before the deadline runs. Also remember that absent a completion, a continuous cessation of labor for 60 days is considered the completion meaning that you have a total of 150 days from the beginning of such a cessation of labor to record your lien.
Once the lien is recorded you will want to send a demand for payment asserting that if you are not paid you will be forced to file a lawsuit to foreclose on the property to pay the overdue amount. Remember you have 90 days from recording the lien to file a lawsuit. It is highly recommended to retain an attorney file the foreclosure lawsuit. You may also consider hiring an attorney to send your demand letter as this tends to add weight to the demand.
This is a general answer based on the limited facts presented above and is not intended to address all potential situations. If you would like to discuss further email me at ryan@huntortmann.com to schedule a free 15 minute consultation.